A federal court has upheld efforts by Iowa officials to prevent roofers and other contractors from directly negotiating with insurance companies.
Iowa law draws a hard line between contractors, who perform the actual repairs on a home, and public adjustors, who help homeowners fill out claims and negotiate with insurers.
In 2024, the Iowa Insurance Division sought to crack down on contractors reportedly acting as unlicensed adjustors, sending more than 70 warning letters and at least eight cease-and-desist orders or enforcement referrals.
Kansas-based Shamrock Roofing fought back, suing the Insurance Division in September 2024, arguing that the division’s enforcement push violated contractors’ free speech rights. It also noted that Shamrock is active in eight other states, many of which are less stringent about public adjusting, and that some of the “routine statements” on company web pages or marketing materials were legal in other jurisdictions where it did work.
Shamrock owner Garen Armstrong told the Des Moines Register in 2024 that Insurance Division employees were threatening roofers on behalf of insurance companies to help insurers avoid paying full claims for storm damage.
“The IID are straight-up lapdogs for the insurance carriers,” he said. “Obviously, they’re not protecting consumers. Otherwise, (regulators) would be going after the insurance companies. They’re not.”
Judge finds regulation does not violate First Amendment
Iowa asked U.S. District Judge Rebecca Goodgame Ebinger to dismiss Shamrock’s lawsuit. In her order, filed Sept. 18, Ebinger wrote that Iowa’s law separating roofers from adjusters “is a valid regulation of professional conduct and does not infringe upon Shamrock Hills’ First Amendment rights.”
Ebinger found that the Iowa law regulates “professional conduct,” which is entitled to a lower degree of First Amendment protection than other forms of speech, and that a law forbidding contractors to act as adjustors primarily focused on regulating business activity with “mere incidental impacts on speech.”
She also rejected Shamrock’s claim the law was unconstitutionally vague.
“This law has a clear legitimate regulatory goal, and it is one reflected by the vast majority of states which have instituted similar laws,” the judge wrote.
Shamrock attorney Heather Voegele said in a statement an appeal is possible.
“Shamrock is disappointed by the Court’s ruling and is evaluating all its options to continue the fight to protect homeowners and contractors operating in Iowa,” she said. “It is Shamrock’s belief that Iowa’s public adjuster laws, as enforced by the Iowa Insurance Division, are an impermissible regulation of speech.”
Case comes amid business struggles for Iowa insurers
The dispute over public adjusting comes in the midst of a difficult decade for Iowa home insurers. Derechos in 2020 and 2021 caused billions of dollars in damage.
In 2024, another wave of losses amid windstorms, tornadoes and flood damage hit western Iowa. Insurers have also been battered by high inflation that drove up the cost of construction materials.
From 2022 to March 2024, at least six insurance companies left Iowa or significantly pulled back their presence in the state. 2024 alone also saw nearly 20% of the state’s county and state mutual insurers merge with other companies.
William Morris covers courts for the Des Moines Register. He can be contacted at wrmorris2@registermedia.com or 715-573-8166.
This story was updated to add new information.
This article originally appeared on Des Moines Register: Judge upholds Iowa law stopping roofers from directly negotiating with insurance companies
Reporting by William Morris, Des Moines Register / Des Moines Register
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